The Oakland Police Department is in some serious hot water as it faces a possible takeover by the federal government. Meanwhile, a federal monitor has just issued a quarterly report that details the account of a whistle-blowing department employee who saw photos of Mayor Jean Quan and federal judge Thelton Henderson (who will be deciding whether a federal takeover is necessary) that had been "defaced in a manner that [Internal Affairs] found to be racist, insulting, and inappropriate." The photos were hanging in a patrol line-up room, and nine lieutenants who used the room all denied seeing or hanging up the offending photos, which were removed within two days.

Meanwhile, the employee who reported the photos to one of the lieutenants and ultimately caused the Internal Affairs investigation had their building-access key card promptly canceled.

The story was part of quarterly report by federal monitor Robert Warshaw, who said the department had made only "slight progress" in the first three months of this year toward implementing some ten-year-old court-ordered reforms, but that he still questioned the department’s "willingness to reform itself." The report comes in the wake of accusations regarding the department's handling of Occupy protests, and amidst a separate independent investigation into last fall's Occupy melees. An internal report from the OPD earlier this year showed that they believed they had shown "great restraint" during the protests and that they, themselves, were the victims.

Meanwhile, Jean Quan tells Phil Matier and CBS that a federal takeover is "not an option." She so far hasn't offered her reaction to the defaced photo.